Securities Arbitration Lawyers

Your brokerage-firm and financial advisor are required to have your best interest in mind when they make investment recommendations or offer investment advice. Unfortunately, that’s not always the case. Instead, financial advisors or broker-dealers often recommend unsuitable investments or investment strategies, withhold or misrepresent material information, or place their financial interests ahead of yours. The result of this negligent conduct or fraud can, unfortunately, lead to investment losses.

If you have noticed any of the following in your investment accounts, you may have a securities arbitration claim:

• Sudden and unexplained losses;
• Transactions in your account that you did not authorize, including buy trades, sell trades, withdrawals, or transfer of assets;
• An excessive number of stock trades or transactions;
• Losses resulting from a lack of diversification;
• Losses arising out of investments that you did not understand; or
• Losses as a result of material risk factors that were not disclosed to you.

No investor is immune from misconduct by their financial advisor or brokerage firm, regardless of age, wealth, or sophistication. For example, an unsophisticated investor who relied entirely on the financial advisor for suitable investment advice may fall victim to a portfolio that lacks diversification or transactions made for no other reason than generating high fees or commissions for the stockbroker or the firm.

Alternatively, an ultra-high net worth investor in Silicon Valley could fall prey to an unscrupulous broker. An investor with a busy work schedule entrusts that their broker is acting prudently. Instead, the broker takes advantage of the investor’s reliance and trust and improperly trades the account. For example, the broker may engage in excessive trading to generate commissions or invest in high fee products that lack a liquid secondary market. The broker may also recommend purchasing risky products without adequately disclosing material facts and information about the securities. The same can happen to an elder retiree in Ohio who has worked their entire life to amass a retirement nest egg. No Wolf of Wall Street-type conduct is necessary to amount to an actionable securities claim. The misconduct may be more subtle, and the level of financial sophistication between investors may vary significantly. Yet, the broker-dealer’s response will almost always be the same: that the investor’s claims are without merit.

Often, investors believe they may be without recourse to recover investment losses. Fortunately, aggrieved investors are not without hope. The Financial Industry Regulatory Authority (FINRA) is authorized by Congress to regulate the financial services industry and operates the largest arbitration forum for securities disputes.

When an investor opens an account with a broker-dealer, the investor must sign an array of account opening documents. These account opening documents regularly include an arbitration clause. This clause allows the investor to file a claim and arbitrate any dispute arising between them and the broker-dealer FINRA member or the financial advisor employee of the broker-dealer FINRA member.

Initiating a securities arbitration can be daunting for any investor regardless of sophistication and net worth. Investors may also be deterred from filing a securities arbitration claim because of unfamiliarity with the forum or costs involved in pursuing a claim. We are here to help.

If you believe that you may have been a victim of securities fraud or other wrongful conduct by your financial advisor or brokerage firm, contact our experienced securities arbitration attorneys for a free evaluation. We have analyzed thousands of accounts and investments and will determine if you have an actionable claim. If you have a case, we will file a securities claim on your behalf and pursue all available remedies. This commitment to our clients is based on a straightforward premise: if we do not obtain a recovery, we do not collect a fee.

Helping investors recover investment losses is our primary focus.

Below are some examples of common types of disputes.

Financial professionals must make suitable recommendations that are in the best interest of the investor. That is why financial advisors and brokerage firms ask investors about their risk tolerance, investment objective, investment experience, and more.

FINRA Rule 2111 provides that a recommendation for a specific investment or strategy must be rooted in a broker-dealer’s reasonable basis belief that the recommendation is suitable for the investor based on their investment profile. FINRA recently amended the Suitability Rule in response to the Securities and Exchange Commission’s (SEC’s) adoption of Regulation Best Interest (Reg BI).

When a broker-dealer makes an investment recommendation, or a registered investment adviser provides investment advice, the investor is entitled to a recommendation (from a broker-dealer) or advice (from an investment adviser) that is in the best interest of the investor, and that does not place the interest of the financial professional or financial institution ahead of the interests of the retail investors.

The “best interest” standard is not limited to “recommendations” to purchase a security. It also applies to recommendations to sell or hold a security. Additionally, it applies to recommendations to buy, sell, or hold an investment strategy.

Misrepresentations and omissions relate to material facts that an investor should know or should have known. A broker-dealer may give out materially false information, make misleading statements, or leave out facts or information that a reasonable investor would consider when making an investment decision.

A brokerage firm is required to disclose to a customer all material facts and material information. When the financial advisor or brokerage firm is not truthful and makes a false representation, an investor may have a claim if the investor relied upon the information to make a decision to purchase, sell, or hold a security or investment strategy. The misrepresentation can be verbal and commonly occurs when discussing the risk level of the security, potential returns, or transaction fees. The misrepresentation can also be written. For example, a misleading statement in an offering prospectus meant to deceive or mislead an investor may be actionable.

Similarly, a brokerage firm must provide all material information to an investor in connection with the purchase, sale, or recommendation to hold a security. The failure to provide all material information to a customer in connection with any of these transactions constitutes an omission.

A brokerage firm or financial advisor may be held liable if material misrepresentations were made or material facts were omitted and, as a result, the investor lost money.

Securities fraud occurs when a person or entity intentionally provides false information or omits material information that induces an investor to make investment purchase or sales decisions. Securities fraud, which is often referred to as investment fraud, or stock fraud, arises from a variety of deceptive practices. Unfortunately, it is also hard to detect.

The following should be red flags to any investor and indicate that they may have been the victim of securities fraud:

• If the investment sounded too good to be true, it probably was. Every investment carries some degree of risk. Generally speaking, the higher the returns, the higher the risk. An investment opportunity that claims to offer substantial returns with little or no risks is a hallmark sign of fraud.
• When “guaranteed returns” are not. If you were “guaranteed” high returns, but the investment failed to deliver, you may have been a victim of fraud.
• You experienced high-pressure sales practices. If you experienced high-pressure sales practices, such as “everyone is investing in this, so you should too” or “this is a once in a lifetime opportunity that will be gone tomorrow,” you may have been a victim of “boiler-room” tactics.

Sometimes, investment losses occur not because the market or company performed poorly, but because financial advisors or broker-dealers committed fraud.

The most common types of securities fraud are theft (conversion of funds), Ponzi schemes, boiler room fraud, elder abuse, and pump and dump schemes.

Iorio Altamirano LLP has extensive experience in holding financial advisors and financial institutions accountable for wrongful conduct.

We have litigated claims before both FINRA and JAMS for retail and institutional investors across the continental United States and Puerto Rico. We also represent retail and institutional international investors with assets in the United States that have suffered investment losses because of misconduct by a broker-dealer under FINRA jurisdiction.

Contact Iorio Altamirano LLP for a free and confidential evaluation of your case if you have suffered investment losses and believe that you may have been the victim of fraud or other misconduct by your broker-dealer or financial advisor.